Daily Management Review

Top Indian Court Rules Amazon And Rival Walmart's Flipkart Must Face Antitrust Probe


Antitrust investigations ordered against Amazon.com Inc and Walmart's Flipkart by Indian competition regulators must be faced by the two retailers, said the country's Supreme Court in a ruling.  
This ruling from the top court of India was a blow to both the retailers as they had approached the court to annul the investigation orders that were issued by the Competition Commission of India (CCI) last year over allegations that the companies were promoting selected sellers on their e-commerce platforms and implementing business practices to squash competition.  The allegations have been denied by both retailers.
Both Amazon and Flipkart had approached lower courts in India as well as in the Supreme Court challenging the probe orders arguing that there was not enough evidence with the CCI to conduct the investigation.  
Companies like Amazon and Flipkart should volunteer for such investigations, said a three-judge Supreme Court bench, led by Chief Justice N.V. Ramana. "We expect organizations like Amazon and Flipkart, big organizations, they have to volunteer for inquiry and transparency. We expect that and you don’t even want (an) inquiry," Justice Ramana told the court.
"You have to submit and an inquiry has to be conducted."
It complies with all laws and "will extend full cooperation to the CCI investigation", Amazon in a statement. A similar statement was also issued by Flipkart.
The Indian e-retail market is expected to be worth $200 billion by 2026 and Amazon and Flipkart are the leading players in this segment. But the Supreme Court’s decision is a major setback for both companies as they had banked their hopes on the top court to get the probe order rejected and prevent the CCI from going ahead with the investigation.
The basis of the CCI’s investigations is a case filed by a trader group called the Delhi Vyapar Mahasangh in which the traders have alleged that the two companies engage in exclusive launches of mobile phones, promoting some specific third party sellers on their e-commerce platforms and giving out huge discounts to reduce competition in the segment.
A recent request by the CCI, asking the two companies to furnish information on 32 questions which included providing detailed information about the top 100 sellers and top-selling products on their platforms, was also raised by Amazon and Flipkart with the Supreme Court and sought a stay order on it. The argument of the companies to deny such information is that such data was "sensitive" business information.
A time period of four more weeks to answer those queries has been given to the two companies, said Justice Ramana.
There were reports in February this year about Amazon providing preferential treatment to a small group of sellers for years. Those reports were supported by evidence it had received against the company, the CCI has said. Amazon has denied any wrongdoing.
On top of these, the two companies also have to potentially face stricter e-commerce regulations and investigations by the financial-crime agency of India over alleged breaches of foreign investment laws.